Lagarde defends rate hikes after Trump's Fed attack

The head of the International Monetary Fund has thrown her weight behind the US central bank's recent rate hikes. Her support came after Donald Trump had called the Fed's policies "crazy" and harmful.

In a press conference ahead of official IMF and World Bank talks in Bali, the managing director of the International Monetary Fund, Christine Lagarde, on Thursday defended central bank rate increases in the United States in what appeared to be a veiled rebuke to US President Donald Trump's most recent remarks about the Federal Reserve.

She recommended more flexibility on capital flow management, adding that some emerging markets, including South East Asian countries, had been far too reluctant to ramp up capital controls to protect their own economies.

Italy in focus

Lagarde also touched on the economic situation in eurozone member Italy, warning Rome that it was well-advised to abide by EU fiscal rules and adhere to the bloc's financial stability regulations amid concerns that the country's 2019 budget could exacerbate financial problems.

"It will remind all of us that when you are a member of a club and you decide to stay in that club, then you play by the rules of the club," she said.